UK mortgage approvals hit highest level since September 2007

(Sharecast News) - UK mortgage approvals hit their highest level in 13 years in September, while consumer credit declined, according to figures released by the Bank of England on Thursday.
Mortgage approvals for house purchase rose from 85,500 in August to 91,500, hitting the highest level since September 2007. This was 24% higher than approvals in February.

However, consumer credit weakened in September, with net repayments of £600m. This followed increases of £285m in August and £1.1bn in July, which marked the first rise since February.

Thomas Pugh, UK economist at Capital Economics, said September's money and credit data showed that the mini-boom in the housing market continued but a fall in consumer credit suggests that consumer spending was already faltering before the latest rounds of restrictions were imposed.

Pugh said there was little evidence that firms are starting to hoard cash again.

"In aggregate, non-financial companies paid back £0.5bn of loans. This compares to the £31bn that firms borrowed at the height of the crisis in March. But note that SMEs are still borrowing, while larger businesses are the ones paying back loans.

"Overall, these figures support other evidence that the recovery continued to peter out at the end Q3. The additional restrictions imposed since September will probably prompt businesses and households to start to conserve cash again, weighing on spending and investment. Indeed, we already expect the recovery to stall in Q4 and it could go into reverse."